NovaCopper hits the ground running in Alaska

Newly minted NovaCopper (NCQ-T, NCQ-X) has grand ambitions for its Upper Kobuk project in Alaska’s prolific Ambler mining district, and the company is off to a quick start with a US$16.5-million exploration program and an inaugural resource at its Ruby Creek zone, which composes a portion of Upper Korbuk’s Bornite deposit.

NovaCopper isn’t a typical junior explorer, having been recently spun-out of NovaGold Resources (NG-T, NG-X) — an advanced-stage gold outfit boasting a $1.6-billion presstime market capitalization. In order to focus on its large US$7-billion Donlin gold project in Alaska, NovaGold formed a separate public company to house its myriad of Alaskan copper projects. NovaCopper emerged with no debt, US$40 million in cash and a co-listing in Toronto and New York.

Making the transition to head NovaCopper is former NovaGold president and CEO Rick Van Nieuwenhuyse, who has extensive exploration experience in Northern Alaska. Van Nieuwenhuyse manned the till during the Donlin gold exploration program, and helped uncover the current copper portfolio in the Ambler district.

“As we did so successfully with Donlin, now one of North America’s premier gold-development projects, the strategy here is to create extraordinary returns through the drill bit,” Van Nieuwenhuyse commented on his move. “Our ultimate objective is that the twin attributes of high grades from multiple deposits, when combined with jurisdictional safety, will result in NovaCopper being rated as the premier vehicle in its class.”

Upper Kobuk is located in northwest Alaska, 322 km west of Teck Resources’ (TCK-T, TCK-N, TCKRF-O) Red Dog zinc-lead mine. The project consists of three volcanogenic-massive-sulphide (VMS) deposits covering 360 sq. km of mineral concessions, called Bornite, Arctic and Sunshine.

Initial exploratory drilling at Arctic — totalling 12,000 metres — identified an indicated resource of 19.4 million tonnes grading 4.1% copper, 6% zinc and 0.8 gram per tonne gold for 1.7 million contained lb. copper, 2.4 million contained lb. zinc and 500,000 contained oz. gold.

NovaCopper’s 2012 drill program is expected to exceed 18,000 metres and focuses on its South Reef and Ruby Creek targets, which are part of the Bornite zone, as well as a satellite polymetallic deposit called Sunshine located 12 km east of Arctic. The company completed 4,500 metres by the end of June, and released a preliminary resource estimate on Ruby Creek.

According to a July 18 update, Ruby Creek contains 6.8 million indicated tonnes grading 1.2% copper for 179 million contained lb. copper, as well as an inferred resource totalling 47 million tonnes carrying 0.84% copper at a 0.5% copper cut-off. The updated resource does not include South Reef, which has been highlighted by intercepts that include 178 metres grading 4% copper in hole 187, and 111 metres of 2.6% copper in hole 194.

“One-percent copper grades in a potentially open-pit resource are rare occurrences these days,” Van Nieuwenhuyse comments. “These results take us a step further in proving our thesis that Ambler represents a district-wide ‘string of pearls.’ Thus, while we are very excited by the initial resources identified at the Ruby Creek zone, management is confident that the endowment at Bornite can be substantially expanded, particularly on our second target in the Upper Kobuk.”

NovaCopper is focusing on the upside at Bornite’s South Reef zone and verifying historic drilling by Kennecott at the Sunshine zone. Notable drill results from Sunshine include: 19 metres carrying 1.5% copper, 2% zinc, 0.8% lead and 27 grams silver in hole 8, and 8 metres grading 2.3% copper, 4% zinc, 0.8% lead and 38 grams silver in hole 6. NovaCopper is confirming the mineralization at Sunshine and exploring a series of downdip limbs of recumbent isoclinal folding. It looks to finalize a preliminary resource estimate by 2013.

NovaCopper filed a preliminary economic assessment on the Arctic deposit in early March. The study modelled a 4,000-tonne-per-day underground operation with annual production of 67 million lb. copper and 80 million lb. zinc, including precious metal credits. The US$262-million development would carry a US$533-million after-tax net present value and a 26% internal rate of return at an 8% discount rate.

NovaCopper has been off to a rough start on the markets, losing 57%, or $2.55 since the company went public in late April. Questions surrounding the viability of NovaGold’s Donlin deposit and fluctuating copper prices have affected valuations. NovaCopper jumped slightly following the news, posting a 1.1%, or 2¢ gain, en route to a $1.90 presstime close. The company has 47 million shares outstanding for an $89-million market capitalization.